Customers2.0

November 27, 2013

On the one day I came across two snippets of insights from totally different perspectives that surprised me when I realised that they are connected. And speaking of "connected" that's what they were both about.

In The 5 New Rules That Will Change The Way You Run Your BusinessGreg Satell explains how technology now shapes our enterprises in contrast to just enabling business processes within. His theory is that building and defending assets is no longer a sustainable strategy and will be a liability. An indeed that although we are mostly still learning what Drucker's 1966 prediction of the "knowledge economy" means Satell says that we're already moving from the Knowledge Economy to the Information Economy.

How does that work - information is a subset of knowledge, right? So that feels like we are moving backwards.

Here is Satell's explanation which contains the big insights. They are big because behind them is the unstated expectation that you know about the unprecendented disruptive power of the technologies of cloud, social, mobile & big data (predictive analysis). These technologies provide the connectivity and the capabilty to provide "instant" actionable insights (knowledge) from information, without having to own and invest in the knowledge assets.

Today we moving from a scale economy to a semantic economy, where the knowledge you own is not nearly as important as that which you can access. We’re also in the midst of a new industrial revolution in which an enterprising entrepreneur can leverage manufacturing, finance, marketing and even supercomputing resources from the cloud.

So it is no longer clear that scale advantages outweigh the strategic rigidity that comes with large enterprises. Big firms are learning that they need to network their organizations in order to stay competitive with an onslaught of nimble startups.

Key insights are these:

Access to information (connectivity) more important than ownership of knowledge;

Massive range of capabilities available as a service e.g. IBM's Watson Supercomputer as a Service - incredible! (More on this but Watson as a Ecosystem is one of the most astounding announcements in the history of computing if you ask me, and I started my first full time job as a Programmer in 1967 so I've been watching for a while!)

Categorising and hoarding knowledge in corporate cupboards is a liability.

The new generation seldom make decisions in advance because they make decisions in real-time. And they will make work and job search decisions in same way.

The next generation will have a radically different approach to work, shaped by a childhood of disruptive technologies. ‘Knowing things’ is not important anymore.

Having a network that gives you answers is more important.

Those points jumped off the page to me, as I recalled Satell's predictions. And also, as Greg Savage has said many times - one key characteristics of the recruiters that survive in the future will be that they have access to a very large network of potential talent (only possible through social). Meaning that it is not knowledge of the candidates but knowledge of where to find the candidates, at scale. That's the connection with Satell's observation.

By the way these trends are also connected to the Internet of Things which recently became the new catch-cry of Marc Benioff, and to M2M (machine to machine data) as they speak to the mass of new information. The challenge then becomes how to collect this as needed and turn it into knowledge on the fly. Doing this the "old way" with in-house IT isn't going to fly. It's going to be cloud services - interacting service platforms and ecosystems bought at marginal cost - the in-house edge will be from Predictive Analysis as it is hard to "platform" this as a service as it is still more of an art.

I can see the reality of this, and how it will change how companies are organised and how people will work, and how today's knowledge assets and structures will become liabilities. Now having a "prepared mind" I'm certain to spot elements of this trend on a daily basis from now on. That's exciting.

Your biggest B2B marketing high?

A forgettable marketing moment? (Or someone else’s!)

Admitting our own inbound marketing was not working especially well when attempting to sell them a digital marketing / social strategy for improve their inbound sales!

What 3 challenges do you have as a B2B marketer?

Making the complex sell resonate the the simplest way.

Creating messages and themes which are as simple as possible but no simpler.

Getting past the education stage of how powerful social business intelligence and sales can be for B2B.

What is the most useful book you have ever read?

Predictive Analytics by Eric Siegel because he described with clarity and humour what “big data” can and cannot do and it reminds me of my past when I spent 7 years as a consultant in computational statistics.

If you were a brand, which one would you be?

SAP – a rising B2B brand star, and in my core domain of mobile, cloud computing, social and big data.

When not marketing, what else do you do?

I give a little time to Berry Steet which provides a refuge and family and children services and which awarded a “Friend For Life” certificate for 30+ years continuous support. Spend as much time as possible with my 3 year old daughter. Keep fit – Bodybump, Spin, Bodyweight exercises, Spin.

Your big B2B marketing prediction for the next 12 months?

More B2B organisations will become painfully aware that a lack of brand awareness, brand articulation, and social presence is holding back their sales as decisions are made more widely across and organisation and with more outside influencers appearing in the buying process than the previous single department or business unit.

April 26, 2013

One of the most common hesitations I see with businesses wishing to deploy more social techniques of engagement is their hang-up about making a video. This example from Google strikes me as the perfect example of a "social business" video i.e. the "casual" video for social engagement with an invisible professional touch.

I see this reticence whether the discussion is about making videos for internal use (for enterprise social networks) or for external consumption somewhere on the social web. The argument is usually polarised and runs like this:

"We need to professionally present our business and have it professionally made and that will cost us $3,000 per video, I know that because I have just spoken to the video people we usually use".

"No, everybody is used to Youtube and they even use those types of amateur videos on the daily news and even business programs - these days we are all able to get the content without fussing about the quality".

I actually favour the second view, just make it with your iPhone and do the best you can to hold things steady and get some good lighting and sound. People just want to hear what your customers or other employees are saying and if that is in their noisy office or factory that is ok.

OK I'll admit that my leaning towards the more casual approach does not usually solve the problem. Mostly I just think that in time those in the "professional" camp will become more relaxed, and until then they just miss out on the opportunity.

But there is a middle ground, and the Google Deep Learning video shows it. Here's what struck me about this video (aside from the astounding content):

The setting is extremely casual;

The framing, angles, and lighting are professional.

It's extremely "business social".

I think that this is a perfect model for those companies concerned about conveying a professional image in a "social" video. I doubt very much that this cost $3,000 to make, but on the other hand it was carefully planned.

October 05, 2012

I was surprised today to see relatively little in the tweetstream in Australia about Facebook's achievement in reaching 1 billion users. I had to search to find comments as they weren't streaming through, and then I also discovered that about half the comments were sceptical or negative, which surprised me.

It's a massive achievement, with big implications for business and enterprise IT. Here are 5 - off the top of my head. They are not very well researched - forgive me - but at least I'm putting out thought-starters about the implications of Facebook's achievement.

1. The power of the smartest combination of technology, technologists, business strategy and execution

It demonstrates how dramatically the smart choice of technology and business models can decimate the competition. We know the story but it's worth repeating that Myspace was bought for $580m in 2005 and reached a peak of about 100m unique visits a month in 2008 and at those times Facebook was deemed to be an also-ran. Facebook's architectural platform strategy together with its computer science and computer engineering prowess a la Google and its incredible ability to execute rocketed it past the competition while at the same time running on a relative shoestring.

And furthermore Facebook has made much of its secret sauce public, through contributing to open source projects and the establishment of its own Open Compute project. That's partly because of its mission, and mostly because it knows that the knowledge alone isn't precious, it's the ability to execute.

Which brings me to my next point, how Facebook has revolutionised the economics of computing.

2. Computing Economics

Facebook's total cost of revenue is about $1b. A large chunk of that goes to running IT infrastructure including "data center operational expenses include facility and server depreciation, equipment rent expenses, energy and bandwidth costs, support and maintenance costs and staff salaries, benefits and share-based compensation".

In Australia the big banks, big telcos, and some other large organisations spend in excess of $1b per annum each on IT to serve a minute fraction of the user base of Facebook.

Can we even calculate how small that fraction is? Let me see, let's say 25m/1,000m = 2.5% right? Now even if you throw in all the reasons that "we're different" and double that 2.5% to 5% then we're seeing 20 times less value for money in Enterprise computing than Facebook can achieve day-in and day-out.

We’ve always been small in terms of number of employees. We have this stat that we throw out all the time here: There is on the order of 1,000 engineers and now on the order of a billion users, so each engineer is responsible for a million users, says Zuckerberg.

In fact, Facebook has reinvented the economics of data centres and computing. Which brings me to my next point - reliability.

3. Facebook's reliability across 1b users is astounding

Australia's major banks all have very public problems in keeping their basic ATM & EFTPOS networks running "Angry customers slam Commonwealth Bank meltdown". In response some have committed huge sums - $300m, $400m - to remediating their systems. The end result for the customer is no difference in anything except that the service will stay up as promised. On the other hand Facebook manages to stay up to high levels of availability and runs all this across public infrastructure - not dedicated expensive networks.

Once again, I am sure that there are all sorts of nuances, all sorts of reasons why "we're different" we're more complicated" etc etc but for all intents and purposes Facebook stays up globally for 1 billion customers while very expensive dedicated enterprise systems in a single country serving a minute fraction of users don't stay up.

If these enterprises knew what the Facebook engineers know than they'd be equipped to deliver a lot better value for money. And furthermore Facebook never intentionally goes off the air for system upgrades, which brings me to my next point.

4. Very clever zero-downtime system upgrades

Facebook has developed a remarkable 100% uptime service while at the same time constantly experimenting, innovating, bug-fixing, updating and upgrading their software. This hasn't fallen out of the sky in to their lap. They've invented most of it, building on the experience of some others like Google. Facebook's proven processes of gradual releases and dark launches should be the envy of large-scale enterprise IT. Their A/B testing processes are phenomenal and they now have the amazing ability to A/B test on just 1% of their active user base and gain feedback from 10 million users!

In contrast, to my knowledge all the banks in Australia are still taking their systems off the air at least every week for system upgrades. And remember, these outages are just repairs, not the continuous raft of new features and substantive user service upgrades managed by Facebook with zero downtime.

5. The value of a platform

The essential reason that Facebook crushed MySpace was that Facebook build a platform while MySpace tried to build a closed community system. Facebook's approach is conceptually the same as building a mobile ecosystem of content and apps, as invented and launched by NTT DoCoMo in 1999 and as copied by Apple 7 years later. This is the essence of why cloud computing is so important. Cloud is only trivially about the dial-up of infrastructure and just outsourcing iron. Rather, it's fundamentally about the ability of platforms to interact and mash-up through defined application and data protocols e.g. APIs and the Open Graph.

It's an old story, but a poorly learnt one. In 1999 DoCoMo when set out to make its i-Mode service the most successful internet and app store-enabled mobile system in the world (in which it easily succeeded) it deliberately aimed to make the content providers and app developers as successful as possible. That's why it gave them 90% of the revenue, and why many listed on the Tokyo Stock Exchange and made thousands of millionaire entrepreneurs. Facebook as a platform has spun-off similar success stories.

With a "flick of a switch" Facebook could become the biggest of many things - the biggest virtual currency provider, the biggest bank, the biggest postcard generator, the biggest flowershop, the biggest video streaming company, the biggest news company, the biggest green electricity retailer etc etc.

That's the power of building platforms and not applications. Is it relevant to enterprises? Well I think if Facebook decided to become the world's biggest bank, or just enter a few prime markets as a banker, then we'd have an answer wouldn't we? And then it would be too late.

Summary

Well done Facebook. What a lesson for enterprise IT there is in the taming of complexity, the agility, the reliability, and the power of the platform. It's a combination of technological mastery and business strategy and execution ability and agility which the world of business has not seen before.

And I didn't even touch on Facebook's data mining and personalization and their ability to do data analytics at a huge scale to connect everyone and to build the map of who and what 1 billion people know. WITH FACEBOOK YOU AIN'T SEEN NOTHING YET!!

September 18, 2012

When Harvey Norman founder and Chairman Gerry Harvey launched a barrage of criticism of the “Internet” at the release of his most recent financial year results I couldn’t help reading on. In fact I was intrigued to read on.

Why was I intrigued to read on?

Well there are a number of reasons. Firstly because having been labelled a “dinosaur” for his previous “Internet denial” e.g. online retail, and having now started an online store he now has real online experience, and yet still decries the potential of that mode of selling – I wanted to see why.

Secondly, he IS a very successful retail business founder and owner – he’s often epitomized as one of the great Australian retail success stories. And he is; although that journey may be coming to an end as reflected in the 31.6% drop in full year net profits for 2011/2012, and the 7% fall in revenue.

Thirdly, Gerry Harvey always says it like it is, he’s that kind of guy, and I always enjoy straight talk. This article was headlined “Gerry Harvey sick of internet 'spin'” and knew I’d been in for a good non-nonsense read – whether I agreed with it or not.

"You devote all this time to your omni-channel and
integrated bloody ... and you go on with all this bullshit and the result is
that it is 1 per cent of your sales. But if you don't go on with the bullshit
you are out of fashion, you are not with-it."

He went on the say
that retailers were “almost forced to come out with spin to plump up their
online strategies to the market”. He's right there, let's admit it.

"I am reluctant to do it but I do it, because if I don't they label me a dinosaur. I'm out there labelled as a bloody dinosaur."

All good stuff and can’t agree more that it looks totally stupid for CEOs to be spruking “omnichannel” guff and especially when inside they think that the Internet and social are all BS. I do have some sympathy for them because if you followed the recent Australian Marketing Institute Marketing Conference 2012 you would have NOT seen a SINGLE tweet mention of "omnichannel" - the CEOs are caught up in already dead marketing jargon.

Now, here’s where Gerry Harvey and I disagree.

Only 1 per cent of your sales

While like the style of what Gerry says, the content concerns me:

...“when you check with Myer or David Jones, whoever, JB Hi-Fi, Good Guys, it’s nothing of their sales, somewhere between half and one-and-half per cent”, says Harvey

"I get out there and tell it like it is, but I get bloody castigated and pilloried."

Gerry's saying that online gets the media attention but the facts are that it is not doing anything significant.

Department stores sales tumbled 10.2 per cent, making them the largest single contributor to the July retail sales fall, according to the Australian Bureau of Statistics. So-called 'other' retailing fall 2.8 per cent while clothing, footwear and personal accessory retailing slipped 0.9 per cent in the month;

In contrast, online sales are growing at up to 25% per annum – the trend is up;

Online sales accounted for 5.3 per cent of the retail market, up from 4.9 per cent in January, NAB said.

What does that mean?

It means that if Gerry Harvey and his cohorts are only seeing “half to 1 percent” of their sales in online then they are under-performing the current online market by at least 5 times. You might say that their product categories are just misaligned with the online market, but that's not what Kogan sees as they report explosive sales growth and record sales for the month of July 2012, and Appliances Online also reports explosive growth (from a low base).

So if your sales as a whole are dropping in a segment which is trending down, and your online sales are performing at 1/5 of the average in a segment growing at 24%, then what's the straight-talking prognosis? I'll leave that to you!

Place your bets please gentlemen

Now if you were to place your bets on online versus “the Gerry Harveys” which would you choose?

Jack Welch once said "If change is happening on the outside faster than on the inside the end is in sight".

On that basis some commentators have called for Gerry to sack himself, "not because he's too old or frail — he remains whip-smart — but because his initial success in building Harvey Norman blinds him from imagining a different future for it".

On face value that's a fair call.

Why are they researching and not buying from us?

In recent comments Gerry Harvey also observed that customers did do price and product research online.

"A lot of them [Harvey Norman franchisees] say people do research online and so the number of people that are researching our product online has jumped 25 per cent but our sales haven't jumped at all."

Does that suggest something to you? I don't get it, this man has been so successful, what can't he see?

I do research online in a store, If I like the people I ask for a price match. If I don't like them I just go to another store where I like the people AND they price match. If they don't price match then I don't buy from them - it's that simple.

Here's the problem, I'll spell it out. I know that the pimply-faced kid in Dick Smith is just trying to sell me the thing that gets him the highest commission, same in Harvey Norman in the mobile and computers. Sure, the guy in whitegoods is older and smoother but he's just flogging the aircon or washing machine with the highest commission as well. Officeworks is staffed to the lowest cost, and that's the only thing I'm interested in there. And all of these people are totally uninformed, which you can establish by spending 2 minutes on the Internet. Now you are the expert with 2 minutes investment - and these sales people and shop owners expect us to take them seriously - that they add value? That's a 1990s joke I'm afraid.

Playing to the reality

In fact the Masters CEO Don Stallings CEO of the Woolworths/Lowes Masters hardware chain says thatan amazing 50% of customers do online price comparison while in-store. That’s a reality and it seems that Woolworths and Masters are playing into that reality, not fighting it. They unveiled their online store in June this year.

"MORE than half the visitors to Masters' hardware stores who are shopping for whitegoods are using a smartphone to check out competitors' prices before making a purchase".

“Customers have the power at their fingertips and Masters fully intends to cater to every customer, regardless of how, when and where they want to shop with us", said Stallings at the launch of their online store.

You'd think that Blind Freddy could see that Masters is on the right trajectory. They know people are researching in their stores. They build a strategy around that reality. They know the people researching will know more about the products and the alternatives than their staff. They know that they have to have an in-store price which is within a "warmth factor" of the prices found online.

So they have to win by trying to capture the customer's heart - build a connection, build a reason to like the staff as people, a reason for customers to want to take their kids with them to Masters and even pay a fraction more but enjoy the experience.

Of course, all this also requires a deep belief in the power of social technologies and especially social enterprise technologies to make a difference. If you don't believe that then prepare now to see your sales shrink in all channels.

Conclusion - place your bets now

So I'm placing my bet on those retailers who know that online might only be minuscule now, but who also understand that they have to adapt and who also appreciate that getting a disproportionately small share of a rapidly growing online segment is a big big red flashing light.

Jack Welsh's observation is a keen one, and closer to home Rohan Lund the new COO of Seven West Media Group was recently quoted in the Australian Financial Review saying that the thinks that the next 5 to 10 years will be transformational for Australian business.

"I think retailing will fundamentally change from what it is today".

Just to remind you of what Gerry thinks: "it’s nothing of their sales, somewhere between half and one-and-half per cent”.

Where are you placing your bet?

Are you comforted by the "it's only 1% argument"?

Gerry Harvey is not a dinosaur and I don't agree with him being portrayed as one, but he does have his head in the sand on this issue.

PPS: Another proof point: a survey just released (26 September, 2012) by Choice, a consumer advocate group, identified Harvey Norman as having the lowest customer service rating among large Australian retailers with "pushy, poor service" and a "lack of product knowledge". Somewhat predictably Gerry Harvey responded that Choice has "got an agenda" and claimed "our service is fantastic". Oddly enough, those retailers that topped the list did not claim that the survey was poorly conducted or biased or had "an agenda"!

PPPS: Also reported today (26 September, 2012) that Dick Smith who rated a mention from me in the post as an example of a past-use-by-date retail model is to be sold for a song by its owners. For a business that a short time ago had 380 stores, and recently wrote down $420m, today's valuation of between $10m and $50m is a testament to the dangers of denial in retail today.

The responses to my article could, in the hands of the right senior executives, form the playbook for a compelling new strategy for Best Buy, one that could do far more than simply preserve the company’s existing market share. But rather than drink in all that free advice, the company’s responses simply wish it away. It’s more denial, now tinged with a dose of anger. According to Dr. Elisabeth Kübler-Ross’s classic psychiatric study, for a patient with a terminal diagnosis those are the first and second stages of grief.

In many years (OK, many, many years) as an entrepreneur, investor, and consultant working with Fortune 500 companies, I’ve found there are two kinds of senior executives. There are those who see mistakes as an opportunity to improve their business and those who waste their energy explaining away real problems.

Downes outlines reason after reason why best Buy needs to change, and how nothing they can do can change the progressions which are happening, for example:

Online competitors are certainly part of Best Buy’s problem, but not for the reasons it thinks. What’s really going on is more basic. Best Buy just doesn’t understand its customers’ point of view.

What I meant was that consumers easily adapt to alternative retail channels. Before the Internet, there was catalog shopping and home shopping from television. For consumers, buying online was just the next step in an obvious progression of more convenient ways to buy.

For brick-and-mortar retailers, however, the shift was jarring. Moving online required new thinking, new management structures, and new strategies.

To compete successfully against new online retailers, traditional retailers would also need to find ways to transform the expensive liabilities of physical locations with limited hours and high labor and inventory costs into assets that complemented rather than competed with the online experience.

Best Buy's leadership team's reaction, from what we see, is to create PR "crisis management" scripts for its staff, respond in rote, dig in, and deny. Nothing usual I suppose.

What is unusual is that David Bowie saw beyond his entire livelihood, his total current world view, and was able to articulate and to acknowledge its demise:

"Music itself is going to become like running water or electricity. So it’s like, just take advantage of these last few years because none of this is ever going to happen again".

Astounding really. Best Buy need David Bowie's help, don't you think?

Let's run over that quote from David Bowie once again:

"But on the other hand it doesn’t matter if you think it’s exciting or not; it’s what’s going to happen".

How do you break strong leadership teams out of their mindsets?

How do you demonstrate the "reality" which they cannot see?

What are the keys to action and follow-through and not just acknowledgement?

June 04, 2011

Do companies honestly think that they can "own the customer" these days? I'm astounded to say that some behave as if they do, in such ways as lack of transparency, creating false expectations, and creating artificial exit barriers. Mistaking owning the customer relationship with owning the customer may be part of the problem.

In the last two days I have had cause to ponder how significant organisations can be so backward and outmoded in their behaviour towards customers - it seems to me to be such a serious disease that it may even signal some early signs of corporate decay.

I say that because in the era of the transformation to social business, those businesses which cling to such outmoded behaviours will become increasingly more exposed, and vulnerable to their competition.

Case 1

At a small meeting with a team from a leading global IT business, a household name and a monster company, pricing models were being discussed for a new software product. The visiting US expert was here to explain that there are three customer segments - 1-100 seats, 100 - 1000 seats, and 1000+. For each segment there are three pricing models. These took some explanation, with lots of notes taken.

The bottom line is that the very small customer actually gets the same deal as the very large customer because there is a marketing strategy to try to capture more of that market. And in fact one of the pricing models for the very small customer just actually states the price - that's the formula - couldn't be more simple.

Whereas the formulas for the large customers are very complex, they have bonuses for current licenses and discounts for volume and then a killer "inverse bugger factor" at the end which magically brings their price down to the same price as the super small buyer needing only ONE seat.

One of the local sales staff asked - why this complexity, and why this magic wand thing at the end to come at with that number? The US expert blandly stated that all this was simply a ploy to make the big customers feel as if they are getting a good deal. It's just negotiation tactics.

Case 2

To move a domain from an Australian firm who describes themselves as a "global publicly-listed IT firm" I had to get an unlock key. Other registries list this for you in the domain details, and you just cut and paste. In this case it was only available by clicking a link and requesting it - and it then said "this has been queued and will be delivered to you in up to 72 hours".

Having to wait 72 hours was bad enough, given that it's readily available and should be visible within the account. Then I had a call, it was from their Support team. Why was I transferring? they wanted to know!

Needless to say I was annoyed to get the call, since whenever I wanted support it's very hard to get - which is exactly what I told them and the actual reason I was leaving, plus their prices were outrageous and up to 5 times what others were charging. Immediately I was offered a much cheaper deal. They know this story.

I declined the offer and went on to use the example that I could not even get my unlock online, that I had to make this request. "Oh I can give that to you right now if you like?" Yes, I like, that's the reason I clicked the request. So if you have this there online then why don't you publish it in my account console? I asked.

"It's a customer retention strategy - so we can call you" !!!!

Where ARE their minds at?

It's beyond belief isn't it. The leaders of these organisations have strategies to deceive their customers, to mislead them, to falsify intentions, and to aim to retain them by brute force.

Not only do these behaviours indicate disorganised organisations which are extremely short-term oriented and with noone accountable for owning a customer relationship, but they think that they can "own" customers by keeping them hostage.

It's a clear symptom of conflicting goals withing the organisation - also a lack of clarity of purpose, lack of mutual commitment across the teams and business units and to the customer, and most of all a lack of respect for their customers. In other words the organisation is misaligned in terms of managing their relationship with the customer. Or maybe they ARE aligned - to short-sighted short-term goals?

I think that it's also even deeper - it's a sign of a corporate sickness. An entrenched malaise of the culture and the leadership.

What's the result with customers

The outcomes of this behaviour are "obvious", even if not so to the companies:

Customers are going to find out - this is the way things are in these days of social media;

Customers are going to feel cheated and disrespected - I did;

And they are going to tell their friends and colleagues - in an amplified social media way.

It's not always the case that they will cease buying from the supplier, because they may be hostage customers.

For example, take me and Qantas. I have 1 million frequent flyer miles, yet I dislike Qantas and their attitude in a multitude of ways. Why do I continue to fly with them? Because the others are not much better (we have little choice anyway) and because I have the 1 million miles!

Whether I stay with Qantas or not, or whether people stay customers of my two case studies or not, it does not mean that staying with them retains their customer equity.

Thinking of customer equity in three parts explains how this is destroyed in these cases:

Value equity - the perception of value is either betrayed, or it comes out to be nothing but neutral and an non-advantage in my examples. So there is negative or zero value equity, despite the fact I might remain a customer;

Brand equity - the perception of their brand. It's bad, and made even worse when the deceptions are discovered, and even worse when a customer feels like a hostage;

Retention equity - if a customer is staying a customer despite their feelings above, then they are definitely going to resent it. They'll be telling the 15 other friends how they resent it, as opposed to the satisifed customer telling 1 other person.

So on all counts the customer equity is destroyed, even if the customer's business is retained.

When businesses try to own customers, instead of focusing on how they can internally optimise and manage the total relationship, then they will always destroy customer equity.

Continual erosion of customer equity can only lead to one thing, provided competitive forces are in play - which is an eventual reflection of the total decline in customer equity in the valuation of the company.

It takes time to pass, but even companies with hostage customers can't destroy customer equity forever and remain unscathed. Hopefully these two companies can pull themselves up and with a bit of reflection get truly focused back on the customer.

Have you experienced "customer control" - how did you react?

Do you still buy from organisations who you disrepect - as a hostage customer?

Is owning the customer verus owning the customer relationship the root cause of these issues?

May 27, 2011

There is always a danger in birds of a feather flocking together, because it can lead to group-think - a lethal corporate disease! But the connection between the social business and agility is a pet theme of mine and I was therefore immediately attracted when I saw that Ray Wang retweeted this, this morning:

THAT caught my eye, and @rossdawson'spost even more so because he recounted that although he had been saying for a considerable period that differentiation was the outcome, he was now focusing more on flexibility as an outcome of social enterprise.

My own hobbyhorse whenever I came in contact with execs or teams implementing "knowledge management" was to ask them why? Nine out of ten times they only had internally-focused answers, usually self-serving and mostly products of the project generating a life of its own.

I was always searching to see if they considered the prime outcome as organisational agility - giving the ability to move faster and to beat the competition. That's what my narrow-minded view saw as the only useful outcome of "knowledge management", but it never came up in these conversations.

Social enterprises can achieve that flexibility, and perhaps that's what I mean by agility. The ability to act in response and anticipation of the market. Even if that comes down to "just" effective continuous improvement I think that would be a huge advantage for most businesses.

We know that social business transforms relationships with customers, and that's about getting closer, better feedback, better service etc, and also about the company being able to use that information to actually change - being agile. So this idea of flexibility/agility through the social enterprise is very plausible. Whereas to me I never, in all my contacts, found it plausible or at least not achievable that "knowledge management" was going to be anything except another burden and overhead.

Coincidently, the same @rossdawson post has a paragraph about gathering and responding to feedback. Perhaps the subject of another post but only this morning I was laying out the case to a client as to why they should be using something like Get Satisfaction as opposed to their web developer's old FAQ system - I call it FAQ 1.0. My argument was essentially that Get Satisfaction isn't about FAQs, it's about customer service, connection, interaction, crowdsourcing, involvement and engagement. That's not what you get from FAQ 1.0 - not unless you have at least the $8.2m and 30 people that Get Satisfaction has focused on this one issue.

Of course if you have an inflexible organisation then FAQ 1.0 will be sufficient. But if you are a social enterprise then your systems need to support your transformation to agility.

Do you see any difference between agility and flexibility?

Is active continuous business improvement within a social enterprise enough to keep it on top?

How strong do you see the connection between the social enterprise and agility?

January 14, 2011

Would a company in crisis management choose to disable it's online customer contact because it is getting too many complaints? If the company is Vodafone then the answer is yes! I know that's almost beyond belief but it is true.

Yesterday Vodafone Australia reinstated its online contact form which it had suspended while it "while it worked through a backlog of customer inquiries".

Vodafone Australia is currently the target of a class action with over 15,000 participants. This action is due in total to Vodafone Australia's appalling service delivery - customers basically claiming they were swindled and wanting out of their contracts and Vodafone refusing to release them. It's also in the midst of a privacy scandal, first denying and then yesterday sacking staff after being "tipped off by a newspaper reporter".

The class action and the lead up to it have undoubtedly reached the highest levels of Vodafone Corporate - this isn't just a Vodafone Australia fiasco. You just wonder on what kind of magnets the Vodafone executives have been sleeping?

Australia is in the midst of a series of El Niño events, including flooding across most of Queensland - an area bigger than combined Germany and France under water (but 1/4 the population of Switzerland). These unusual events seem to include the Vodafone PR disaster plus a couple of other monsters as we start into 2011. One other was specifically in relation to the floods, where retailer Bing Lee decided to donate to the flood relief fund but only on the condition that people Liked their Facebook page!

This was slammed by the very social media to which Bing Lee had appealed. (But, surprisingly their Facebook page remained unapologetic and actually accelerated their Fans and Bing Lee then donated $10,000 to the relief fund.)

The whopper, before Vodafone, was a loud and high-profile campaign by Australia's most renown troglodyte businessman Gerry Harvey condemning people who buy online as "unAustralian"!!!

Harvey runs a very successful retail chain, but he's most known for his head-in-the-sand on all things Internet most famously declaring in 2000 that online retailing was a fad and would die. In fact he's continued on that theme for a decade, being quoted as little as a year ago saying that "online retail sales were a dead end".

Harvey was upset that overseas online purchases of less than $1000 do not attract any sales tax for Australia buyers. The Australian Tax Office says that collecting the money would cost more than they gain.

The result of Harvey's ferocious campaign is that more Australians than ever are aware of the money they can save by purchasing online, and that Harvey now faces a monstrous backlash from store shoppers. Survey's showed up to 97% of people disliked Harvey's conduct of this PR exercise. Even Harvey himself expressed regrets, having been vilified across the nation, and remarkably said that "getting involved was 'suicidal'." PR agency FD Third Person were the geniuses behind the campaign, I wonder if they were paid on press clippings as they surely would have received a bonus!

So in summary El Niño has left a trail of rain and PR disasters in its track down under. Vodafone takes the prize for the most amazing customer relations exercise of the decade - suspending their complaints form - and Gerry Harvey's unAustralian online shoppers runs a close second.

What is your biggest customer relationship disaster story, or success story, for 2011?

November 04, 2010

A Qantas spokeswoman said there was "no suggestion it's come from our aircraft".

That's PR.

At the same time, no actually quite a way ahead of that time, Facebook readers already knew that the engine that exploded and fell into Indonesian houses and parkswas from Qantas. They didn't even have to speak Indonesian, they just had to look at the photos.

That's social media.

When an engine exploded on QF32, a Qantas A380 heading out of Singapore, their PR machine swung into full mode of mouthpiece to send the messages and defend the organisation. That's how we've traditionally viewed PR, so no real surprises.

In the meantime, in fact not "in the meantime" but a little ahead of the Qantas auto-responders, Indonesian Albert Fan among others on Facebook had already posted photos of the Qantas parts and how they had landed in parks and ripped apart a house wall. All with the nice new modernised "flying kangaroo".

Qantas always plays to an incident management auto-cue which reads "there was no danger to passengers" and they were "on message" for this incident as well. The Twitter pics show the shafts of metal protruding through the main wing, and we've seen aircraft go down with less apparent damage, so the incident control mantra just seems completely out of sync with transparency. In fact, a week after the event it came out - through media investigations - that there wassevere damage that went within an ace of being catastrophic and which by any account posed an extreme risk to passenger safety.

Of course a single swallow doesn't make Spring. But it typifies it. I know Brian Solis and other PR thought leaders have views which eclipse the PR autoresponder role, but the example shows that culture plays a big role. Qantas is typically arrogant and self-righteous, but this time social media has really hung them out to dry.

While Qantas has never had a jet fatality, research company UMR found in 2008 that 66 per cent of Australians believed the airline was not safe. But people's faith in the airline had jumped to 83 per cent in September 2010, the research found.

What's the answer to these cultural roadblocks, in this case to using social media to connect and inform people - as part of PR?

I think it's the old story. You educate and motivate and train the ones who are willing to change - you do your best - and you sack the rest. There's a bit of culture change going on at Qantas, but clearly it hasn't touched on PR yet!

How do you think Qantas missed the Facebook photos - pure arrogance or just incompetence?

What's the hardest thing for PR to change to accommodate a social media participation?